Expert Mode: Recasting Loyalty from a Cost Center to Your Core Strategic Weapon
This article was based on the interview with Jim Sturm, President of North America at Capillary Technologies by Greg Kihlström, AI and MarTech keynote speaker for The Agile Brand with Greg Kihlström podcast. Listen to the original episode here:
For years, we’ve been bracing for—and frankly, getting a bit tired of hearing about—the death of the third-party cookie. The so-called “cookiepocalypse” has been the industry’s longest, most drawn-out apocalypse, and at this point, the initial panic has subsided. What remains is the hard, strategic work of building a new foundation for customer relationships. As enterprise marketing leaders, we’re all deep in the trenches of this transition, tasked with architecting sustainable, first-party data ecosystems that not only respect customer privacy but also deliver genuine business value. It’s a challenge that demands we re-evaluate every tool in our arsenal.
This is where customer loyalty comes in. For too long, many organizations have relegated loyalty programs to a tactical corner of the marketing department, viewing them as little more than a sophisticated mechanism for distributing discounts. But in today’s landscape, that perspective is not just outdated; it’s a massive missed opportunity. The modern loyalty strategy is no longer a simple program; it’s the central nervous system of the customer-centric enterprise. It’s the primary engine for gathering consented, high-fidelity data and the strategic weapon for driving growth that is both profitable and durable. As Jim Sturm of Capillary Technologies argues, the game has fundamentally changed, and it’s time to treat loyalty with the strategic seriousness it now commands.
The New Mandate: Loyalty as Your First-Party Data Engine
The shift away from third-party data wasn’t just a technical inconvenience; it was a philosophical one. It forced us to move away from the murky world of data acquisition through inference and tracking toward a model based on transparency and consent. This is a healthier place to be, but it requires a new contract with the customer. Loyalty initiatives are the most effective way to formalize that contract. When a customer willingly signs up for your program, they are explicitly granting you permission to learn about them in exchange for a better experience. This value exchange is the bedrock of modern marketing.
As Sturm explains, this is less a technological revolution and more a return to first principles, albeit powered by sophisticated technology.
“…what’s happened with third-party cookies and and more predominantly regulations, laws, uh consumer privacy and litigious society that we live in, there’s a move completely away from speculation or from third-party data to first-party data. And that’s what loyalty initiatives and strategies are all about. Because when you join a loyalty program, you opt-in, you consent to having information kept about you because you know and you expect that uh you will have a better then relationship with a brand.”
Sturm’s point is critical. The consent granted through a loyalty program is not passive; it comes with an expectation. Customers aren’t just giving you their email for another coupon. They are giving you data on their preferences, their purchase history, and even their aspirations (what Forester has aptly called “zero-party data”) because they expect you to use it wisely. They expect you to know them, to anticipate their needs, and to reward their continued business with relevance, not just rebates. This transforms the loyalty platform from a simple database into a dynamic, consented intelligence engine that can—and should—power every customer touchpoint across the enterprise.
Beyond Incrementality: The Three Dimensions of Modern Loyalty Measurement
If loyalty is now a strategic asset, then we need to measure it like one. The old-school KPI of simple transactional incrementality—did they visit one more time? did they spend ten more dollars?—is no longer sufficient. It’s the baseline, the table stakes of measurement, but it fails to capture the full scope of a well-executed loyalty strategy’s impact on the business. Leaders who want to elevate the conversation in the C-suite need a more sophisticated, multi-dimensional framework.
Sturm offers a powerful three-part model for measuring the true business impact of loyalty, moving far beyond simple transactional lift.
“So, now these three categories of loyalty, a great program is focused on all three. And how do I drive incrementality? How do I combine with my product and experience, gain emotional experiences with a consumer. And then how do I use the program to steal share for my competitor? Look, it’s it’s a street fight every day. And loyalty strategies have become uh critical.”
Let’s unpack these three categories:
- Transactional Incrementality: This is the foundation. Yes, you absolutely must prove that your loyalty initiatives are driving profitable behavior. This is non-negotiable.
- Emotional Brand Engagement: This is where things get interesting. True loyalty isn’t transactional; it’s emotional. It’s the difference between a customer who buys from you because you sent a 20% off coupon and one who, as Sturm describes his daughter, smiles at the very mention of your brand. This is about building an emotional moat that discounts can’t bridge and competitors can’t easily cross. You measure this through repeat visits not driven by promotions, engagement with non-promotional content, and positive brand sentiment.
- Competitive Share-Stealing: This is the most strategically aggressive dimension. Every market has what Sturm calls “category heavy splitters”—consumers who frequently shop the category but divide their spend between you and your competitors. A sophisticated loyalty strategy uses data to identify these customers and deploys personalized experiences and incentives designed specifically to win their full wallet share. It’s about turning a 50/50 customer into an 80/20 advocate.
This framework allows marketing leaders to tell a much more compelling story. You’re not just funding a discount program; you’re investing in an engine that drives profitable growth, builds brand affinity that lasts, and actively takes market share. That’s a conversation every CEO and board member wants to have.
Winning Over the Final Boss: The CFO
Even with a sophisticated measurement framework, there is often one final hurdle: the CFO. In many organizations, the finance team has been conditioned to see loyalty programs as a line item in the marketing budget—a cost center synonymous with margin-eroding discounts. Every CFO, as Sturm wryly notes, is a natural-born skeptic when it comes to loyalty, armed with the perfectly reasonable argument: “My best customers are going to come anyway, so why am I paying to keep them?”
Overcoming this skepticism requires speaking their language. It requires rigorous, undeniable attribution that connects every dollar of investment in loyalty directly to the bottom line of the P&L.
“…every CFO tends to be a skeptic of loyalty initiatives in the beginning… as long as the initiatives that you’ve created can be directly attributed to the bottom line uh into the report that a CFO is looking at, they uh they are they are believers. So, therefore it is critical to be able to tie any campaign, any strategy, then be able to attribute it to to that piece of incrementality.”
The key here is moving the conversation away from “discounts” and toward strategic investment. A modern loyalty platform should provide the tools to do just that. Through control groups, predictive modeling, and granular attribution, you can demonstrate precisely how a personalized offer to a high-value, at-risk customer prevented churn, or how a targeted experience for a “category heavy splitter” directly resulted in a measurable shift in spend away from a competitor. When you can show the CFO a report that says, “This initiative generated $X in incremental profit that we would not have otherwise realized,” the skepticism melts away. The program stops being a cost center and is rightly seen as a powerful engine for profitable growth.
From Program to Enterprise Infrastructure
The underlying theme of this evolution is that loyalty is no longer a siloed “program.” The most forward-thinking brands are treating it as a core piece of enterprise infrastructure—an always-on system that gathers customer intelligence and orchestrates personalized experiences across marketing, sales, service, and even product development. It’s the connective tissue for the entire customer journey.
As we look ahead, the conversation will continue to mature. AI and predictive analytics are no longer novelties; as Sturm says, they are “table stakes.” The next frontier is about using this powerful infrastructure to build the kind of genuine, emotional loyalty that can’t be bought with points or discounts. It’s about creating experiences that are so seamless, so relevant, and so attuned to the individual that the customer feels truly known and valued—the modern equivalent of the corner pub where they know your name and your usual order. That is the ultimate strategic advantage, and it’s one that a well-architected loyalty strategy is uniquely positioned to deliver.
